Question

A city's recreation and parks department needs to expand an existing public sports complex. The city engineer determines the following life cycle cost estimates: Initial costruction costs will be $225,000, annual operating and maintenance expenses will be $85,000, in year 6 the complex will need a $75,000 refurbishment, the estimated salvage value in year 10 is $100,000. Additionally, the city financial officer estimates that the expanded complex will generate $190,000 annually (... from use-fees, rental, space leased to food and bevarge vendors, etc.). Draw a cash flow Diagram.

Answer 1

Please find the following cah flow diagram:-

Particulars	0	1	2	3	4	5	6	7	8	9	10
Initial Construction Cost	(225000)
Annual Op and Maintenance Cost		(85000)	(85000)	(85000)	(85000)	(85000)	(85000)	(85000)	(85000)	(85000)	(85000)
Refurbishment							(75000)
Salvage Value of Complex											100000
Cash Inflow		190000	190000	190000	190000	190000	190000	190000	190000	190000	190000
Net Cash Flow	(225000)	105000	105000	105000	105000	105000	30000	105000	105000	105000	205000